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What Is a Yield Trap?

By Robin Hartill, CFP – Updated Mar 2, 2025 at 11:25PM

Key Points

  • Beware of stocks with high yields as they may indicate underlying financial risks.
  • Scrutinize companies with high payout ratios and declining stock prices to avoid yield traps.
  • Verify stable revenue, manageable debt, and healthy cash flow before investing in high-yield stocks.
Key findings are powered by ChatGPT and based solely off the content from this article. Findings are reviewed by our editorial team. The author and editors take ultimate responsibility for the content.

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